Shares of Tesla (NASDAQ: TSLA) fell as much as 8.9% on Thursday, in the aftermath of the company's third-quarter earnings release. The stock is down about 7% at the time of this writing.
Continue Reading Below
The stock's decline likely reflects disappointment in the company's wider-than-expected loss per share and an approximately three-month delay for Model 3 production. Tesla reported a non-GAAP loss per share of $2.92, worse than its non-GAAP gain per share of $0.71 in the year-ago quarter and worse than a consensus analyst estimate for a loss of $2.31.
Tesla's revenue and vehicle sales were up in Q3, rising about 5% and 30% year over year, respectively, compared to the year-ago quarter. But production bottlenecks for Model 3 weighed on results and guidance.
High initial production costs for Model 3 combined with limited-volume production meant the company's non-GAAP automotive gross margin fell from 25% in Q2 to 19% in Q3. This was the primary reason for Tesla's wider loss.
In addition, worse-than-expected Model 3 production during the quarter, primarily due to a bottleneck in its battery module assembly line at its Gigafactory, meant Tesla only produced about 260 Model 3 units during the quarter. As a result, Tesla now expects to achieve its production target of 5,000 Model 3 units a week in "late Q1" instead of by the end of the year.
Despite Tesla's Model 3 production challenges, the company said it was confident it can rapidly ramp up Model 3 production, albeit about three months behind schedule.
10 stocks we like better than TeslaWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Tesla wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of October 9, 2017